PPP finalizes party line of 'full repeal' of crypto taxation… “double taxation, NTS unprepared”

PPP adopts party line to scrap crypto-asset taxation

Debate over tax fairness on crypto after scrapping the financial investment income tax

“Clear double taxation… preparing legal response measures”

“National Tax Service unprepared… lacks understanding”

The People Power Party (PPP) has finalized its party line to “fully repeal” the planned income tax on virtual assets (cryptocurrencies) scheduled to take effect next year.

The PPP announced this on the 25th after holding an “on-site roundtable on improving the digital-asset taxation system” with heads of the country’s five major crypto exchanges at Coinone’s headquarters in Park One Tower in Yeouido, Seoul. The party said it plans to formalize its stance on repealing the tax through public hearings with the industry and investors going forward.

Attendees included Floor Leader Song Eon-seok, Policy Committee Chair Jeong Jeom-sik, Rep. Park Soo-young, Senior Secretary for Floor Policy Kim Eun-hye, Senior Secretary for Floor Operations Yoo Seong-beom, Chief Spokesperson Choi Bo-yoon, and Senior Floor Spokesperson Park Chung-kwon. From the industry side, Dunamu CEO Oh Gyeong-seok, Bithumb CEO Lee Jae-won, Coinone CEO Cha Myeong-hun, Korbit CEO Oh Se-jin, Streami Vice President Choi Han-gyeol, and Kim Jae-jin, standing vice chairman of the Digital Asset eXchange Alliance (DAXA), were present.

Ahead of the meeting, Song pointed to what he called the irrationality of the current taxation framework. “With the number of crypto investors surpassing 13 million, setting the policy direction is important,” he said, adding, “The U.S. regards crypto assets as commodities and is building regulations. I think Korea should also take such aspects sufficiently into account.” He continued, “If crypto taxation is implemented, issues of fairness could arise. We will reflect voices from the field to prepare legal and policy responses.”

On the 19th, Song introduced as lead sponsor a “partial amendment to the Income Tax Act” that would abolish provisions taxing capital gains and lending income from crypto assets. The bill’s main thrust is to abolish the crypto income tax while maintaining the value-added tax regime applied to items such as exchange fees, thereby adjusting the overall tax structure. The aim is to overhaul the taxation system in line with a recent trend in which the U.S. Securities and Exchange Commission (SEC) classifies crypto assets as commodities, and to resolve controversy over double taxation.

In fact, the market has continued to debate tax fairness between stocks and crypto assets after the repeal of the financial investment income tax. A key issue is that stock trading gains are not subject to a separate income tax, whereas taxation on crypto assets is slated to be introduced.

Kim Eun-hye, the senior secretary for floor policy, also highlighted the point. At a back briefing held after the closed-door meeting, she said, “In major countries including the U.S., there is a trend of viewing crypto assets as commodities,” adding, “With investors effectively bearing value-added tax through transaction fees, adding income tax on top has been criticized as excessive taxation.” She went on to stress that “the current structure, which classifies crypto assets as ‘other income’ and limits the deduction of loss carryforwards, also needs improvement.”

Criticism also continued over insufficient preparation of the taxation infrastructure. Rep. Park Soo-young said, “Through incidents such as the exposure of mnemonics (secret phrases), the National Tax Service has shown it lacks understanding of crypto assets,” adding, “The international Crypto-Asset Reporting Framework (CARF) information-sharing system is also centered on aggregate data, making it difficult to identify individual transaction histories, so the basis for taxation is not sufficient.” He continued, “If taxation is pushed ahead under the current system, a balloon effect could occur in which funds move to overseas exchanges,” adding, “This could lead to a contraction of the domestic market and capital outflows.”

There was also a call for cooperation from the Democratic Party of Korea and the government. Park said, “We have not yet been able to confirm the ruling party’s position on repealing crypto taxation,” and added, “I hope they will organize their stance before discussions at the tax subcommittee.” Kim said, “Second-stage legislation is just as important as crypto taxation,” adding, “We are ready to enter consultations, but discussions are not moving forward because a single proposal has not been prepared. A change to a more constructive stance by the government and the Democratic Party is needed.”